Archive for February, 2014

CMHC’s move to hike mortgage insurance premiums prompts competitors to follow

Friday, February 28th, 2014

Garry Marr
Other

The cost of mortgage default insurance is about to go up for most consumers after competitors moved quickly to follow Canada Mortgage and Housing Corp.’s decision to raise premiums.

At the top end of the market for someone with a mortgage for 95% of the value of their home, the premium CMHC charges will go from 2.75% to 3.15%. On a $450,000 mortgage, the fee — it is charged up front and often tacked onto the mortgage, would rise from $12,375 to $14,175.

CMHC controls about 70% of the mortgage default insurance market in Canada with private players Genworth Canada and Canada Guaranty holding the rest.

Genworth announced it too would raise premiums across the board by an average of 15%. Its increases will take effect May 1 too.

“All three insurers have the same standard premiums today. By the time CMHC hikes its fees in May, I suspect the privates will have announced matching increases,” said Rob McLister, editor of Canadian Mortgage Trends, before Genworth matched the hike.

A key issue will be whether the hike, it’s only 10 basis points for mortgages that are 65% loan to value, leads to people trying to buy ahead of the increase.

On the call with journalists, CMHC officials indicated they didn’t expect any of this so-called front-running to happen. However, when mortgage rates were set to climb, consumers did try to buy early to beat the increase — albeit interest increases have a far greater impact on consumer costs.

Finn Poschmann, vice President, research with the C.D. Howe Institute, said he thinks the increase will lead to a jump in sales ahead of the May 1 price change. “As a share of closing costs, it is a pretty big hit,” said Mr. Poschmann. “On a monthly basis it’s not that much. The change goes by the application date not the closing date so even if you are going to be closing a couple of months later, you are facing an incentive to get the mortgage application in.”

He applauded the change because it means CMHC is operating in a more professional manner.

“This is much better risk management and risk pricing,” said Mr. Poschmann. “And it is a sensible, scaled increase in premiums for rising loan to value ratios.”

Last year, the federal government announced that CMHC would fall under control of the Office of the Superintendent of Financial Institutions. Then in late 2013 it announced it had brought in a former investment banker, Evan Siddall, to run the Crown corporation.

© 2014 National Post

Mortgage costs set to rise as CMHC leads premium hike

Friday, February 28th, 2014

TARA PERKINS
Other

Canada Mortgage and Housing Corp. has raised mortgage insurance premiums for the first time since the 1990s, and signalled more hikes could be on the way.

The increases, which will apply to policies that are obtained from May 1 onward, amount to about 15 per cent on average. The move was quickly copied by rival mortgage insurer Genworth MI Canada Inc.

CMHC executives said the higher premiums would mean an extra $5 a month for a borrower with a 95-per-cent loan-to-value (LTV) ratio and a loan of $248,000. But the increase will be more sizable than that for many people.

The move is part of a transformational shift at the Crown corporation, which sits at the centre of the country’s housing market. CMHC is attempting to behave more like a private-sector company as the federal government seeks to reduce the housing risks that taxpayers are taking on.

Mortgage insurance compensates lenders, including banks, when the mortgage borrower defaults. Federally regulated lenders are required to obtain the insurance for loans where the borrower has a down payment of less than 20 per cent. Lenders are technically responsible for the premiums, but in practice those are passed along to borrowers.

CMHC expects to take in an extra $150-million to $175-million this year as a result of the price increases, although that won’t flow into profits right away because of accounting policies. The Crown corporation earned almost $1.28-billion during the first nine months of 2013. It had nearly $560-billion of insurance in force at the end of September, and insured loans for 386,222 housing units in 2012.

Finn Poschmann, vice president of research at the C.D. Howe Institute, said CMHC had not been charging enough to cover its risks in the past, and the increase is a good move.

“The impact will be trivial for the 80 to 85 per cent loan-to-value range,” he said. “For buyers in the 95 per cent loan-to-value range, typically first-time buyers, the changes mean a significant pop to closing costs, in the neighbourhood of $1,500. In centres like the [Greater Toronto Area] or Vancouver, the typical hit will be a lot more.” (Mortgage insurance premiums can be amortized over the length of the mortgage, rather than paid up front at closing.)

He said the impact in the Greater Toronto Area would be closer to $2,000 or $10 a month.

“This will make life more difficult for high LTV first-time home buyers in the big centres,” Mr. Poschmann said. “Not huge, but certainly an incentive, on the margin, to get an offer accepted and a mortgage application filed before May 1.”

CMHC made the decision to boost its premiums less than two months after the government installed former investment banker Evan Siddall as CEO.

CMHC’s two private-sector rivals – Genworth MI Canada, and Canada Guaranty – told Ottawa late last year they were frustrated by CMHC’s static pricing. They argued that higher capital requirements were hurting their profits, and said they would normally raise their prices in response, but felt hamstrung because CMHC is by far the biggest player in the sector. They have traditionally copied CMHC’s pricing.

“Given today’s announcement by CMHC, we are currently reviewing our pricing structure to understand potential implications,” Canada Guaranty CEO Andy Charles said in an e-mail.

CMHC said Friday that from now on it will announce its premiums during the first quarter each year, signalling that changes could become more common. Prior to this the last changes were between 2003 and 2005, when CMHC actually cut prices.

Higher mortgage insurance premiums fit with Finance Minister Jim Flaherty’s desire to reduce the risks that taxpayers are assuming by way of the mortgage insurance system. Mr. Flaherty has repeatedly stated that CMHC has grown to become something that extends far beyond its original mandate, and he has taken numerous steps to restrict its growth.

The Crown corporation was created in 1946 to help returning Second World War veterans find homes, and has become one of the country’s largest financial institutions.

International observers, including the International Monetary Fund (IMF), have urged Ottawa to further reduce government’s role in the mortgage-insurance market so that more housing risk is shared with the private sector.

© Copyright 2014 The Globe and Mail Inc.

Vancouver Cost of Living Remains High

Wednesday, February 26th, 2014

Two studies out this week paint a picture of a city and a province living beyond its means

Matt O’Grady
Other

While the RBC Economics Research study, released Monday, indicated that B.C.’s housing affordability had improved in the third quarter of 2013, the Vancouver market in particular remains Canada’s priciest city in which to live and own. According to RBC–which defines housing affordability as the percentage of pre-tax household income needed to service the costs of owning a home at market values–Vancouver scores an 81.6 per cent, down 2.3 percentage points from the previous quarter.
 
Toronto, by comparison–the next most expensive market–scored a 55.6 percent (up 0.1 percentage points); Montreal, 38.8 (unchanged); Ottawa, 36.7 (down 0.4 percentage points); and Calgary, 33.8 (down 0.2 percentage points).
 
“If it is possible to take some comfort from the earlier housing market slump, it would be in noting that it contributed to some improvement in Vancouver’s very poor affordability levels,” said Craig Wright, senior vice-president and chief economist of RBC. “Still, housing affordability remains uncomfortably stretched and this is likely perpetuating market stress in the area.”
 
The other report, released by credit monitoring agency TransUnion on Tuesday, detailed how the average consumer’s total debt levels (excluding mortgage) decreased between the fourth quarter of 2013 and the fourth quarter of 2012 in all of Canada’s major cities–all except Vancouver. In Vancouver, average consumer debt spiked from $38,357 to $41,077 on a year-over-year basis.
 
“It’s encouraging to see drops in debt for most of the major markets in Canada,” said Tom Higgins, TransUnion’s vice president of analytics and decisioning services. “Vancouver is an outlier in this scenario, but it should be noted that their unemployment rate–a major driver in consumer spending–is much lower than what is observed in other larger cities such as Toronto and Montreal.”
 
And so it is that we’re driven to spend–on mortgages, on credit cards–with money that we don’t really have. The virtual West Coast life continues unabated.

© 2014 Canada Wide Media Limited

Canvas at Great Northern Way and Thornton Street 209 condos in two buildings by Onni

Wednesday, February 26th, 2014

Old Finning property emerging as Vancouver’s newest neighbourhood

Charlie Smith
Other

These days, many real-estate developers like marketing their properties on the strength of the surrounding neighbourhoods.

So it shouldn’t come as a surprise that the Onni Group is highlighting the location of its yet-to-be-built Canvas project of 209 homes in two buildings near the corner of Great Northern Way and Thornton Street.

It will be across the street from a new Emily Carr University of Art + Design campus, which is expected to be open by 2017.

Canvas will be a two-block walk to Southeast False Creek, a six- or seven-minute hike to Science World and the Main Street Station, and an even shorter stroll going east to the VCC-Clark SkyTrain station.

“All the top-floor homes have private roof decks,” Onni’s vice president of marketing, Nic Jensen, tells the Georgia Straight by phone. “Standing on the corner of Great Northern Way and Thornton, you’re looking at the city, the snow capped mountains, and B.C. Place Stadium.”

He wouldn’t reveal the exact price per square foot because the company hasn’t filed its disclosure statement.

But he stated that homes will be available in the low $300,000 range as well as in the upper $200,000 range, and they will include storage and parking.

It’s the latest development in the evolution of what was once the industrial heartland of Vancouver.

For decades in the 20th century, Finning International was the largest landholder along Great Northern Way, building Caterpillar heavy-equipment machinery. But in 2001, when the company gave 7.3 hectares between Main Street and Clark Drive to four postsecondary institutions–UBC, SFU, BCIT, and Emily Carr University–it changed the area’s future forever.

The first transformation came with a new Centre for Digital Media, which was located in a renovated Caterpillar tractor factory. The centre, which offers master’s degrees, added a second building with 76 student apartments, bringing a residential component to the area.

The next big change came last year when Premier Christy Clark announced $113 million in funding so that Emily Carr could create its new campus.

Meanwhile, galleries such as Monte Clark, Catriona Jeffries, and Equinox have set up shop in the area, adding to the nascent neighbourhood’s artistic orientation.

A coffee shop is opening at the Centre for Digital Media and nearby, the Red Truck Beer Company is building a brewery at 295 East 1st Avenue.

It’s not far from the Brassneck Brewery at 2148 Main Street.

Matt Shillito, an assistant director of community planning at the city, told the Straight by phone that the zoning allows Onni to build artist live-work units. He noted that there are a couple of other projects in the area built under the same zoning category.

“We work hard to ensure that the space is designed to be very suitable for artists, and that’s the focus, but it isn’t absolutely restricted to artists,” he said. “There’s not typically a covenant, but we push our policy as hard as we can.”

Shillito pointed out that the Onni project and the Emily Carr site also aren’t defined by the city to be in the area known as False Creek Flats. Jensen prefers calling the neighbourhood “Southeast False Creek Flats”, which indicates its proximity to both the Olympic Village and the large swath of industrial lands on the north side of the property.

Because lands owned by Onni and Emily Carr are not classified as “industrial land” under Metro Vancouver’s regional growth strategy, it’s acceptable to allow certain types of housing.

Shillito added that Onni bought a second parcel from Emily Carr, which is behind the site of Canvas.

“They’ve got an allowance for about 150,000 square feet of live-work [housing] and about 100,000 square feet of hotel or student-residential that they could build under the existing zoning,” Shillito revealed.

He emphasized that the city has long viewed False Creek Flats to the north “as an important employment area serving the city as a whole and the downtown in particular”.

That will be the focus of a comprehensive planning process, likely to begin before the end of the year.

In the meantime, the city and Onni staff are closely watching to see where the region’s next rapid-transit line will be built.

According to Shillito, TransLink’s plans call for a SkyTrain station at Emily Carr University’s new campus if the regional transportation authority and senior governments decide to extend the Millennium Line from VCC-Clark Station.

What this could mean for the housing market in that area is anyone’s guess.

© 2014 Vancouver Free Press

Vancouver extends building bylaw deadline

Monday, February 24th, 2014

Other

Implementation of the City of Vancouver Building Bylaw – which will ban doorknobs and usher in some of the toughest energy requirements in Canada – has been postponed from March 2014 until July 1 2014, according to Mark Hartman, Vancouver’s green building manager.

“Only building permits submitted after June 30 will be required to comply with the new building bylaw, which includes updates to windows, insulation, heating systems, and accessibility,” Hartman wrote this week in an email to members of the building industry.

The bylaw, which covers one- and two-family dwellings, bans the use of doorknobs in new homes and substantial renovations in favour of levered handles and also requires that all doorways be wider to accommodate wheelchairs.

Energy requirements include an upgrade to window performance, an increase in insulation levels, greater air tightness and the mandatory installation of a 240-volt electrical vehicle outlet in each carport or garage.

Hartman said the new bylaw is part of the City of Vancouver’s strategy to become the “greenest city in the world by 2020.” He didn’t explain why the bylaw deadline has been extended.

However, a building consultant on the city’s bylaw advisory committee, said the delay was due to “intense lobbying by building product manufacturers, particularly in the window and door industry.”

The Western Investor

Vancouver luxury market expected to feel the pinch

Friday, February 21st, 2014

KERRY GOLD
Other

The party might be over for Vancouver’s high-end luxury housing market, according to an immigration lawyer who’s studying the impact of Canada’s investor program – and more importantly, what will happen now that it’s been cancelled.

The millionaire visa program got kiboshed in budget cuts last week after it was deemed a lousy deal for Canada. The closure means no entry for about 45,000 applicants who were awaiting permanent residency, most of them from mainland China. Although the investor program was put on hold two years ago, the government had still been processing visas that were on backlog to the tune of 1,200 a year out of Hong Kong, says immigration lawyer Richard Kurland. But now, absolutely everything has come to a grinding halt, which is, he says, a game changer.

Cancelling the program has been a huge topic for the real estate industry over the last week, since so much of Vancouver’s high-end property market on the city’s west side and in West Vancouver has been fuelled by wealthy Chinese investors.

Mr. Kurland sounds positively tickled pink by the cancellation and foresees a wave of listings for high-end properties seeking buyers before the market drops.

“I’ve been waiting for this to happen,” Mr. Kurland says. “I expect to see ‘for sale’ signs on expensive properties sprouting like mushrooms, once people figure out what it means to cut off 1,000 buyers at the high end.”

He believes it has to hit the top end of the market hard because of the sheer numbers of foreign millionaire buyers who got stopped at the door.

“You’ve cut out a key demand source for high-end Vancouver real estate.”

You’d be hard-pressed to find someone in the know who thinks the investor program was a good deal. The numbers say it all.

“I think that the program was horribly priced,” says Tsur Somerville, professor at University of B.C.’s Sauder School of Business. “It’s selling citizenship.”

And look at the cost, he says. Investors had to put up an $800,000 loan to the government for five years, at zero interest. At 5 per cent, that amounts to a contribution of $200,000.

“These are people who are buying Maseratis for their kids. It’s about the cost of one of those,” says Mr. Somerville.

Why did the investor program continue for so long? It appears to be a case of short-term thinking. From the province’s perspective, it’s an estimated 1,000 people loaning the government $800,000 interest free, which is $800-million, says Mr. Somerville.

“If I’m the provincial government, that’s great,” he says. “But from the perspective of the economy and social dynamics, it’s not without its costs. We’re in a place where that is a concern, because [housing] increases demand for land, which is scarce in supply. And it’s not giving us the benefits.”

The cancellation has been largely misunderstood, says Mr. Kurland. Ending the program doesn’t mean immigrants can no longer apply for residency. There is permanent residency available through the B.C. Nominee Program, for immigrants who are skilled workers, entrepreneurs, students, or business owners. And Quebec is still offering the millionaire investor program, which could remain a point of entry for cash flow.

“It’s like you have a house with 45 windows and one got shut, and you claim you’re suffocating,” he says of the backlash.

This cancellation, he says, isn’t about curtailing immigration, but putting an end to a bum deal for Canadians – and in Vancouver in particular, where the repercussions of an unaffordable market have been felt most. Consider that the average declared income in Metro Vancouver was only $41,176 according to Revenue Canada statistics from 2009. The average selling price of a detached house is more than $1-million. The market is clearly driven by outside forces that include foreign investment (investors from elsewhere in Canada have an effect too).

Mr. Kurland says another major game changer is the upcoming revision to the Canada-China tax treaty. Part of the update to that treaty may include easy access to information, such as property ownership records, in order to deter tax evasion.

“If the new tax treaty is going to be modelled after the others Canada has signed in the last few years, it will allow for specific information exchange between the two countries, like we do with the Americans.

“The ramifications are huge.”

Mr. Kurland says another factor at play is that many of those houses in Vancouver’s high-end market were purchased by non residents – wealthy buyers who were ill advised by overseas agents that if they bought a house, they’d fast track the visa process. It doesn’t work that way, though, says Mr. Kurland. When those homeowners sell, they’ll be facing non-resident withholding tax. Mr. Kurland says he has already asked the Canada Revenue Agency about the potential fallout of that scenario.

“Even when a report on a sold house is filed, it will take some time to open it and examine it and figure it out. Another half year goes by. But the owners are not in the country any more, so who’s left holding the bag?” asks Mr. Kurland.

“I’m interested in the tax dollars that will go missing here. Who loses? The treasury. That’s who is going to take the hit.”

Mr. Kurland also questions the many holding companies that owned so many of the properties in Vancouver. Was anyone keeping track of ownership of those companies, and the taxes that could have been claimed if they changed ownership outside of Canada?

“Yes, it’s a free market,” Mr. Kurland says. “However, a free market includes taxation rules and regulations. That’s built in. And those rules are there for a purpose – and not just to collect money. If you remove any impact of these tax regulations for overseas purchasers, you are making it more expensive for locals who abide by the tax laws and you’re making it less expensive for overseas buyers who are able to evade or avoid our tax laws.

“In other words, the locals are at a disadvantage. It’s as if we are offering subsidized property transactions to overseas buyers and sellers.”

David Ley, University of B.C. geography professor and author of Millionaire Migrants, agrees that our lack of data on property ownership is to our detriment.

“There’s such a failure in due diligence in our record keeping, we really have set ourselves up to be taken advantage of,” Mr. Ley says. “This will be an interesting next few months.”

Most predict a softening in the luxury market. Others believe there may be little fallout. Developer Will Lin doesn’t think losing the investor program will affect property values in the immediate future because so there are still so many potential new buyers here.

“Maybe in the upper end niche market where millionaires go for house hunting, but even there, we aren’t gong to see the immediate effect of that, because typically, there’s a long process they go through,” he says. “They land here, settle the kids into school and whatnot, then they usually stay with relatives for six months or buy an investor home that doesn’t require a mortgage. And then in a year or two they eventually buy the big dream home. We won’t see that change.”

Thomas Fung, who owns Aberdeen Centre, said he foresees other avenues of cash flow coming into the city.

“It may slow down the inflow of capital or investment in the property market, but at the same time, I’m sure that those people have their ways to channel the funds from China. They have their way to do it.”

Mr. Ley says there was a correction in the mid-90s when an exodus of Hong Kong residents left Vancouver and prices in Shaughnessy fell 26 per cent. As to whether the softening of the top end market will have a trickle down effect is a matter of debate. Some say overall population growth in the mid-range market is too big to be affected.

“But what you can never tell is the psychological affect of this,” Mr. Ley says. “How deep will the fear be? That is the question. People who’ve been going with the flow may now get more fearful and withdraw investment. I think that is a possibility.

“And I am talking about foreign investment, because that’s what drives the top-end market. Anyone who says otherwise is either misleading or mislead.”

For his part, Mr. Kurland has been keeping his eye on the Multiple Listing Service since the program ended. While on the phone, he was busy counting the high-end houses on MLS that have come up on the Vancouver market.

“That’s seven homes listed since the budget,” he says.

© Copyright 2014 The Globe and Mail Inc.

How to Buy a Home Before It’s Built: Pre-Sale Tips

Thursday, February 20th, 2014

Theresa Borsman
The Vancouver Sun

Thinking of buying a pre-sale condo? You might be tempted by the tantalizing array of pre-sale development units available in the Lower Mainland, some with attractive incentives. (Just check out our Developments section!)

Here’s how it works. When you agree to buy a pre-sale unit, you’re actually entering into a contract for the right to receive—and an obligation to pay for—a finished condo at a set point in the future. This forms the basis for some of the unique opportunities and risks that go along with buying pre-sale.

Advantages

There are definitely advantages to buying pre-sale. You can pay just a small deposit now, save money while it’s being built, then pay the balance of your deposit when you move in. Or you can pay your deposit in bite-sized increments during the building process.

You can also customize design elements, finishes and even your layout. Because you’re buying a brand-new home, you won’t have to worry about doing costly repairs for at least another decade. And your unit will be covered under the BC government’s 2-5-10 Year Home Warranty Insurance program, so that if something does go wrong, you won’t have to pay for it.

Risks

But there are also risks and unique obligations that need to be considered before you sign on the dotted line and hand over your deposit. Here’s what you need to know: your rights and responsibilities under the Real Estate Development Marketing Act (REDMA).

Though there are advantages to buying pre-sale in any market, the greatest opportunities arise in a rising or hot real estate market. That’s because, by the time you move into your completed condo, it’s already worth more than what you agreed to pay for it.

In a softening market, on the other hand, by the time you complete the sale, you might already have lost money. If you’re relying on a mortgage, lenders may only cover the market value of the property at the time of completion, leaving you scrambling to raise more cash for the difference.

The mortgage climate can change without warning as well. Many people who purchased before the federal government administered tighter mortgage rules found they no longer qualified for the amount they were pre-approved for by the time they had to pay up.

So what happens if you can’t raise the cash you need to complete the sale, or your unit is worth less than what you owe when it’s time to pay up? Unless the developer violates the terms of your agreement, you are legally obligated to complete the sale—or forfeit your deposit.

Besides market changes, there are other unknowns, from unexpected construction delays to condos that don’t get built at all.

So how can you mitigate some of the potential risks?

Lay the groundwork

Long before you’re ready to sign anything, find out everything you can about the builder of each development you’re considering. Do they have a reputation of building on time? Talk to your Realtor and to homeowners who’ve purchased from them in the past. And if you’re a first-time buyer with a small down payment, consider sticking with pre-sale units that are already close to completion to eliminate some of the unknowns.

Talk to an independent mortgage broker as well, to find out what you can afford and to make sure your credit is in shape before you go in. That way you’ll be financially ready.

Review the developer’s Disclosure Statement

Before you sign a purchase contract, you have the right to review a Disclosure Statement prepared by the developer, according to Section 21.2 of REDMA. The Disclosure Statement lays out everything you will be buying—including proposed and filed bylaws, common property and storage allocations, and descriptions of appliances, furnishing, and finishes.

Under REDMA, it also has to include an estimated construction start and end date, as well as any “material facts� that could “reasonably be expected to affect, the value, price, or use of the development unit or development property.�

The developer is obligated to keep you up-to-date on amendments to estimated dates and material facts. This is important because building a new development is a long and complex process, and things often morph as it progresses.

Take time to review the statement carefully and make sure you understand all the terms set out in it. This step is best tackled with an experienced lawyer specializing in residential real estate and, of course, your Realtor (not the developer’s).

Check the small print before you sign

 Check the Pre-sale Contract

After you’ve thoroughly reviewed the Disclosure Statement, look over the Pre-sale Contract with a fine toothcomb. Here are a few things to look for:

  • Deposit
    Besides the obvious (how much, when it’s due, and how it should be paid), look to see who gets the accrued interest during the construction process. It can be either the buyer or developer, and this should be stipulated in the contract.
    Generally your deposit is held in trust until it becomes part of the purchase price at completion, but REDMA allows the developer to get insurance allowing them to use your deposit in the interim. This should also be stated in the contract.
  • Forfeiture clause
    This clause gives the developer the right to claim your deposit if you breach your contract. It usually includes the wording that the deposit will be considered a genuine pre-estimate of damages and not a penalty, giving them a better chance of hanging on to your deposit if you try to back out and end up in court.
  • Right to terminate the contract
    Developers may need to walk away from a project for various reasons, including being unable to get skilled trades or permits. The contract will usually outline this right to cancel the project, at which point your deposit plus interest would be returned to you.
  • Right of rescission
    The contract will also cover when you can terminate the contract without losing your deposit. Under REDMA s. 21.2, once you sign the pre-sale contract, or a receipt acknowledging you’ve had time to review the Disclosure Statement (whichever comes later), you are given a 7-day “rescission period� where you can serve written notice to the developer to terminate the contract.
    Also, if you receive an amended Disclosure Statement outlining material changes to be made to the layout and size of your unit or to the common facility because of the issuance of a building permit, you’re entitled to another 7 days to rescind your contract (REDMA Policy Statement 5).
  • Allowable unit changes
    Contracts usually give the builder the right to change the size, certain design features, or substitute comparable materials. The contract should also outline any adjustments to the purchase price that would be made if the finished size varies by more or less than 5% than planned, say. The contract should also allow you to cancel the contract if the difference is extreme.
  • Assignments
    This section covers whether or not you can sell and assign your contract to a third party before completion, what fees would be involved, and what would happen to your deposit.

Buying pre-sale has some unique rewards, but the process can be far from simple. REDMA legislation leaves room for interpretation and is being shaped by a number of ongoing court cases. So it’s a wise move to enlist an experienced Realtor, mortgage broker and lawyer to help safely guide you through the process—and into your swanky, custom home.

 

Advantages

Risks

Greater customization: Choose your preferred design, layout, décor upgrades, and even parking configuration.

Terms of contract may change: You might not get exactly what you wanted. Check the fine print with your Realtor and lawyer.

Warranties:

  • 1-year developer’s warranty to cover issues before building is complete but after you’ve put down a deposit.
  • 2-5-10-year warranty program covered by the BC Government.

No mortgage guarantee: Not all banks will fund pre-sales. Some lenders will only cover the value at completion, which could be less depending on market conditions. And if your financial picture changes, you may not qualify even if you were pre-approved. 

Low hassle: Minimal replacements or repair costs and work for 10–15 years.

No way to back out: Once you’re all in with a signed contract, you’re in for the long haul—or you forfeit that deposit.

Low cost of ownership: New energy-efficient homes mean lower utility costs, lower maintenance fees, and minimal chance of paying special assessments for repairs.

Must have patience: Properties can take up to several years to build. And unexpected delays may have you hunting for temporary living situations until move-in day.

In a rising market: The value of your unit can be higher upon completion than when purchased, giving you instant equity.

In a soft/falling market: By the time you move in, you already owe more than your condo’s worth.

 Â© 2014 Real Estate Weekly

Even real estate consultants hate condo towers: Eco-density discussion in Grandview

Wednesday, February 19th, 2014

If you think an urban planning professor hates condo towers, wait ’til you hear the professional real estate consultant. Patrick Condon and Richard Wozny lay a compelling case against Vancouver’s condo tower craze.

Jordan Yerman
Other

Well, that was unexpected

We were expecting a public debate on the virtues of the condo tower between an urban planning professor and, well, a guy who helps build condo towers. Classic throwdown. Instead, they double-teamed the notion of the condo tower; one slapping it in the face, the other kicking it right in the… podium.

The event description read in part: “In Vancouver, the potential ecological benefits of higher density has become a key justification for many new condo developments. However, the unintended consequences of increased density have the potential to dramatically scale up an urban region’s ecological footprint. [...] Are Downtown Vancouver and Manhattan the template for a sustainable future? Or are higher towers doing little more than letting us live closer to an atmosphere filled with increasing amounts of CO2?”

Discussing the issue are Patrick Condon and Richard Wozny. Condon is a former city planner who now chairs the urban design department at UBC. Wozny is a real estate development consultant who has worked with some of the biggest players in the region, from crown corporations to mega-condo developers.

Patrick Condon: How to do density

The debate was hosted by Conrad Schmidt, a social activist, founder of the World Naked Bike Ride, and guy who showed us a little too much browser history.

Condon got started: “I’m a believer to some extent –– or maybe to a large extent–– in the d-word; that is, density. However, I take exception to the way density has been described or defined in this community lately, and in how there only seems to be one model for density, and that’s the tower.”

n quickly recapping his Seven Rules for Sustainable Communities, Condon suggested a return to Vancouver’s original streetcar grid, with transit arteries lined by low-rise buildings mixing residential and business. Ideally, said Condon, transit stops, commercial services, and schools would be within a five-minute walk from your building’s front door. “Density doesn’t necessitate a high-rise,” argued Condon, “but the market and the political forces that be [sic], whoever, think that the high-rise is the way to go.”

Despite those tourism-board photos showing the shiny, shiny faces of Yaletown and Coal Harbour, Condon said, “we know that this is really a low-rise city.” Meanwhile, he adds, the average family size has dropped from six in the 1920s to less than two today. This means rethinking a city centre full of single-family homes, but not giving in to the false promise of the condo tower. Indeed, the 2050 Plan for a Sustainable Vancouver does not focus on high-rises, but instead on evenly-distributed low-rise structures; while radically reducing the city’s environmental footprint. “It’s amazing what you can do when you have 25 students who are working 45 hours per week for no pay.”

Broadway Corridor: A circular argument

Condon asserted that the City’s push for the Broadway Corridor subway line is being used to justify high-rise condo development. “The Broadway subway is being touted as the transportation answer for our city, and in the same breath they’re saying that it requires incredible additional density in order for it to make sense.”

So the development of high-rises along the Broadway Corridor is used not only as a rationale for such an expensive transit project (i.e. if we’re spending $3,000,000,000 on this, we better make damned sure that it’s serving as many people as possible), but also under the hopes that some of the CACs offered might make their way back towards paying for the project itself.

“The tie-in between the towers question and the transit question is intimate,” said Condon, “and not too many people are really recognizing that.”

For the same $3 billion that we’d spend on that Broadway Corridor line, Condon said, we could network the whole city with light rail, going back to that streetcar network we once had.

©Observer Media Group

Vancouver Real Estate Forum took place Feb. 20

Wednesday, February 19th, 2014

Other

Real estate is a hot topic across Canada, but nowhere does it generate the type of lively discussion as it does in Vancouver.

Vancouver is considered one of the most valuable real estate markets in the country. Thanks to its gorgeous mountain and ocean backdrop, vibrant business and cultural communities, it seems everyone wants a piece of property here.

Prices across the region have climbed steadily over the years, in large part because there is only so much space to build between the mountains and ocean that attract many of us, and keep us here. It’s this reality that underscores what I believe are three key themes that define Vancouver’s real estate market today: value, urbanization and sustainability.

Let’s start with value. Real estate in Vancouver isn’t cheap. In fact, the rising price of housing is a concern for parents like me who wonder if their children will ever be able to afford their home in this city. On the flip side, that can make an investment in real estate a wise one.

As the population throughout the region grows, including the number of people moving from across Canada and other parts of the world, so too will demand for housing.

The good news for homebuyers and business owners is that developers are working to meet the increased demand for real estate. New communities are being built across the Lower Mainland, alongside a continued effort to revive more tired areas. Together, these two trends are helping to build vibrant new neighbourhoods and spur economic activity, which benefits the local economy as well as the people living and working in it.

That’s where urbanization comes in. To help keep property ownership affordable, local governments are working with developers and others across the real estate industry to build up, not just out, ensuring the best use of land and creating more efficient spaces. That, in turn, helps to drive down costs for buyers.

By increasing density in our neighbourhoods, we are not only making better use of the space available, but also helping to ensure the next generation of buyers can get into the market.

Sustainability is key to ensuring the success of this development boom. New projects going up today are not only smarter when it comes to conserving space, but are also designed to conserve energy and help to reduce greenhouse gas emissions. Some of these “green” building features include everything from solar and wind power generation to drawing heat from sewer lines. Upgrades to older buildings are also incorporating more energy-conservation designs.

The themes of value, urbanization and sustainability will be a big part of the discussion at two major real estate events to be held in unison in Vancouver. The 20th annual Vancouver Real Estate Forum is taking place on February 20, co-located with BUILDEX Vancouver, which is happening on February 19 and 20.

These events are an opportunity for people in the industry to get together, share ideas and further drive innovation across the sector. The events, which together will feature thousands of delegates, hundreds of exhibits and dozens of seminars, are also a chance for the public to get educated on the real estate market. That includes the various factors that will impact their property investments in the future.

It promises to be a very interesting discussion, and one that will continue for years to come.

Vancouver Real Estate: World Housing Uses One-For-One Model

Tuesday, February 18th, 2014

Other

You’ve probably heard of the TOMS one-for-one model, where buying a pair of shoes for yourself results in a pair of shoes being donated to a child in a developing country. But what if someone told you the same thing could be applied to buying a condo?

World Housing, a Vancouver-based real estate firm is doing just that.

World Housing partners with developers (certified by the company), who agree to donate $2,900 from the sale of each condo in a development, to fund the building of homes in third-world country landfill communities. The first development signed up in Vancouver will be announced on March 18.

“We cannot possibly overstate the incredible social change that is created by gifting homes to the most deserving people on earth,” Peter Dupuis, who co-founded World Housing along with Sid Landolt, said in a press release.

“The conditions of landfill communities are the worst in the world; these people are literally surviving off of the garbage of others, spending hours a day trying to find clean water and food for their family. Receiving a home gives a stable living environment to help create a better life.”

On-the-ground construction and management is done through World Housing’s NGO partners, which train and employ local youth.

If they want, condo buyers can follow the progress of the home they helped create.

The firm is currently working in three landfill communities based in Mexico, the Philippines and Cambodia, and have already built 53 homes in Phnom Penh since they launched in beta form last year, reports The Vancouver Sun. They hope to have helped 30,000 people by 2020.

The 130-square-foot homes are insulated and ventilated, have doors and windows that lock, are made of metal to ensure durability, are on stilts to protect them from flooding and vermin, and are easily transportable in case of emergency. They also have rainwater collecting systems and simple outlets for basic electrical needs.

“It brings to the forefront the real need for safe and secure housing for the world’s most vulnerable communities,” noted Landolt. “A relatively small contribution truly does make a lifelong impact on the families receiving this gift.”

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